Source: Press TV
A class-action lawsuit was filed Tuesday against JPMorgan Chase on behalf of investors accusing the bank of misleading shareholders about the $2 billion in trading losses that have roiled the company this week.
Lawyers said the bank did not fully disclose the risky nature of JPMorgan's trades. The lawsuit alleges the bank falsely told shareholders that its bets on financial instruments known as derivatives were "hedges" that would help the firm offset overall risk in its portfolio. Instead, lawyers say, the bank was betting purely for profit and did not fully disclose how much money the bank had already lost before by the time it held an April 13 conference call with investors.
The result was that JPMorgan's stock price traded at "artificially inflated prices," the lawsuit alleges.
"These derivative bets went horribly wrong, resulting in billions of dollars in lost capital for the Company and billions more in lost market capitalization for JPMorgan shareholders," said a press release from Murray Frank LLP, the law firm that filed the suit in U.S. District Court for the Southern District of New York.
The law firm is still seeking a lead plaintiff for the lawsuit and others who bought the company's stock between April 13 and May 10. Washington Post
On Wednesday, shareholders of the bank filed two lawsuits against it, accusing it and its leaders of taking excessive risk and causing the loss. cbc.ca
One suit was filed by California shareholder James Baker. A second was filed by shareholder Arizona-based Saratoga Advantage Trust's financial services portfolio. cbc.ca
The first case to hit the dockets was a class action brought on Monday by Robbins Geller Rudman & Dowd, a well-known San Diego-based plaintiffs law firm, on behalf of investors who purchased JPMorgan stock between April 13 and May 11 of this year. The lawsuit alleges that JPMorgan CEO James Dimon and former Chief Investment Officer Ina R. Drew, along with others, "deceived the investing public regarding JPMorgan's business, operations and management." Huffington Post
On Wednesday, JPMorgan shares were down another 0.4 percent at $36.10 in midday trade. AFP
The FBI confirmed Wednesday it has opened a "preliminary" investigation into the $2 billion U.S. trading loss at the biggest U.S. bank, JPMorgan Chase. cbc.ca
The head of the Bureau, Robert Mueller, told a U.S. Senate Judiciary Committee in a hearing on FBI oversight that how long the investigation takes "will depend on a number of factors," and did not comment on what possible legal violations might be involved. cbc.ca